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March Market Commentary

By March 5, 2024No Comments


It’s been a mixed picture across the globe in the last few weeks.

Many of the world’s major economies have continued to see minimal growth in recent months, while the UK and Japan have slipped into recession.

But the US is bucking this trend, as are many emerging markets such as India.

As always, let’s take a closer at what’s going on in key markets worldwide.


The UK was found to have slipped into recession at the back end of last year, as official figures revealed the economy shrank by 0.3% between October and December 2023. This followed a 0.1% contraction between July and September.

Although the UK economy grew by 0.1% throughout 2023 as a whole, this was the weakest annual growth figure since 2009 (excluding 2020, when economic activity was hit by the pandemic).

Rising costs continue to be a drag on the economy, as inflation stayed stuck at 4% in January, the same rate as in the previous month and twice the Bank of England’s target of 2%. Although food prices fell in January for the first time since September 2021, the inflation rate was pushed upwards by rising gas and electricity costs.

The Bank of England had previously hiked interest rates in an effort to tackle inflation. However, the Bank’s Monetary Policy Committee has kept rates on hold at 5.25% for four times in a row. In its most recent meeting, the Committee was split on what course of action to take, with members voting 6-3 in favour of keeping interest rates on hold.

Meanwhile, there have been indications in the last few months that the job market is cooling. Wage growth fell from 6.7% between July and September to 6.2% between October and December – its lowest level in more than a year. Official figures also showed that the number of vacancies fell by 26,000 to 932,000 in the three months to January – the 19th consecutive drop.

There was better news in the retail sector, with new data showing a 3.4% jump in shop sales in January, following a sharp decline in the previous month. In addition, the housing market showed signs of growth, with Halifax reporting that house prices went up by 2.5% in January 2023 year-on-year. This means a typical home in the UK now costs £291,029.

Nevertheless, continuing Houthi attacks in the Red Sea remain a concern for the wider economy, as the British Chambers of Commerce has warned that the disruption could push up prices. More than a third of businesses polled by the organisation said they are already experiencing higher shipping costs and delays of up to four weeks as a result of the conflict.

The inflation crisis in recent years has been driven largely by soaring energy prices, but while costs have fallen in recent years, oil and gas companies have continued to enjoy bumper profits.

BP saw profits of £11bn in 2023 – a strong performance, despite being down on the £21.8bn profit seen in the previous year. Similarly, Shell generated profits of £22.3bn in 2023, down from £31.4bn in 2022.

Meanwhile, British Gas’s parent company Centrica saw its profits fall by 17% to £2.8bn last year. However, British Gas itself saw its profits go up tenfold last year, as they rose from £72m in 2022 to £750m in 2023.

Banking giant Barclays has recently found itself under considerable pressure over its support for the fossil fuel industry. However, the company has now confirmed it will stop providing direct funding for new oil and gas projects, and limit lending to energy businesses that plan to step up fossil fuel production.

This news coincided with the announcement that Barclays is to purchase Tesco’s retail banking operations in a deal worth £600m. Approximately 2,800 members of Tesco’s banking staff will transfer to Barclays as part of the deal.

Elsewhere in the financial services sector, NatWest Group reported a pre-tax profit of £6.2bn in 2023 – its highest annual profit since the financial crisis in 2007. Meanwhile, HSBC has posted profits of £24bn in 2023 – up nearly 80% on the previous year.

In the retail sector, The Body Shop fell into administration during February, and it is now in the process of closing up to half of its 198 UK stores and reducing the size of its head office.

Electronics retailer Currys, meanwhile, is reportedly set to be taken over by Chinese e-commerce group In addition, parcel delivery firm Yodel is understood to be close to agreeing a deal with a potential buyer, although administrators are expected to be called if a buyer cannot be found.

The UK’s manufacturing sector received a boost in February with news that Jaguar Land Rover-owner Tata is to invest £4bn in a new electric vehicle battery facility in Somerset. Approximately 4,000 jobs are expected to be created at the site in Bridgwater, along with thousands more in the wider supply chain. Production of electric vehicle batteries is expected to begin in 2026.

The pound ended February down 0.04% against the dollar, and on the financial markets, the FTSE-100 Index ended the month at 7,651.points, up 0.27% on January.


The European Commission remains confident of growth this year, although it has downgraded its forecasts slightly. Originally, it had predicted growth of 1.3% in the European Union and 1.2% in the eurozone throughout 2024. However, these forecasts have now been revised downwards to 0.9% and 0.8% respectively.

Nevertheless, the Commission is confident that economic activity in the EU will “gradually accelerate again” in 2024, while falling inflation will lead to an increase in real wages and consumer spending. Furthermore, it expects trade with foreign partners to normalise this year, following a “very weak” performance in 2023.

Inflation is predicted to fall from 6.3% in 2023 to 3% in 2024, before falling again to 2.5% in 2025. However, the Commission has warned that ongoing geopolitical tensions, in particular in the Middle East, could create trade disruptions over the coming months, and potentially push up prices.

Germany’s struggling economy is one factor putting the brakes on wider growth across the European Union. In fact, the German Bundesbank has said there is “still no recovery” for the country’s economy, as output is expected to “decline again slightly in the first quarter of 2024”. “With the second consecutive decline in economic output, the German economy would be in a technical recession,” the Bundesbank stated.

Germany’s Economy Minister Robert Habeck has acknowledged that the economy is in “troubled waters”, and the government has revised its growth forecasts for 2024 down from 1.3% to 0.2%. Despite this, Germany has assumed the position of the world’s third-largest economy, after Japan fell into recession, and it now sits behind the United States and China.

France has also downgraded its growth forecasts for 2024 from 1.4% to 1%. Furthermore, the country’s government has confirmed it will cut spending by about €10bn, which Finance Minister Bruno Le Maire believes will allow it to stick to its target of lowering its deficit to 4.4% in 2024.

Mr Le Maire insisted that its growth forecast “remains positive”, but stressed it takes into account factors such as conflicts in Ukraine and the Middle East, the disruption in the Red Sea, and economic slowdowns in Germany and China.

Energy company EDF was one bright spot for the economy in February, as it reported a net profit of €10bn in 2023, up from a €17.9bn loss in 2022. But the war in Ukraine continues to weigh heavy on Europe as a whole.

Last month, EU leaders agreed to provide Ukraine with regular and predictable financial support between now and 2027. This money will help the country pay salaries, pensions and run public services, as well as keep its administration running while Russia’s aggression continues.

Ursula von der Leyen, President of the European Commission, said Europe’s commitment to stand with Ukraine remains “unwavering”. “We all know that Ukraine is fighting for us,” she commented. “So we will support them with the necessary funding and provide them with the much-needed predictability they deserve.”

Meanwhile, the EU has begun a formal investigation into Chinese-owned video platform TikTok, over potential breaches of the Digital Services Act. The investigation will look into whether rules over the safeguarding of children have been broken and whether its algorithms lead to users being exposed to damaging content.

Elsewhere in the tech sector, the Financial Times is reporting that Apple could be set to be fined €500m over alleged anti-competitive practices. An investigation into the tech giant began after music streaming platform Spotify complained to the European Commission that Apple was limiting its communications with customers.

On the financial markets, Germany’s DAX index rose by 4.76% in February to end the month at 17,708 points. Meanwhile, the French CAC 40 index rose by 3.74% to end at 7,943 points.


The US economy continues to perform strongly when compared with many other leading economies across the globe. In the final quarter of 2023, gross domestic product went up by 3.3% – well above the expectations of many analysts. This helped the US achieve growth of 2.5% over the year as a whole.

Speaking to BBC News, Ryan Sweet, Chief US Economist at Oxford Economics, said: “The US is holding up much better than other countries. It seems like the engine of the US economy continues to hum along where it’s sputtering in other nations.”

The US’s relatively strong performance has led to investors predicting that interest rates will start to come down in the next few months.

In its most recent meeting, the US Federal Reserve left interest rates on hold at 5.25%-5.5% – a 23-year high. Chairman Jerome Powell has downplayed expectations of a rate cut in March, but acknowledged that rates are likely to come down this year. In the meantime, members of the Fed are seeking “greater confidence” that inflation will fall.

“It is a highly consequential decision to start the process of dialling back on restrictions,” he said. “We want to get that right.”

Inflation fell from 3.4% in December to 3.1% in January, according to the US Labor Department.

The jobs market has been one notable bright spot in the US economy in recent months, as employers added 353,000 jobs in January and the unemployment rate remained at 3.7%.

Neil Birrell, Chief Investment Officer and Lead Manager of the Premier Miton Diversified Funds at Premier Miton Investors, said the latest employment figures “provided a shock” as they beat expectations “by miles”.

“These numbers show the US economy to be strong and will sway anyone thinking a March rate cut was on the way to look further out,” he commented. “Any thoughts of recession are off the mark as well for now.”

In the business sector, social network Reddit has announced it plans to sell shares to the public, which it believes will drive growth. However, users of the platform have reacted with alarm, with one describing it as “the beginning of the end”.

Meanwhile, chip maker Nvidia has announced record sales, with revenues rising by 265% to £17.4bn in the three months to January 28th year-on-year. Jensen Huang, Chief Executive of Nvidia, said: “Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations.”

As the war in Ukraine rages on, the US has stressed its commitment to supporting the nation, with President Joe Biden saying he is confident a $60bn package of military aid will be approved by Congress.

This followed an appeal from Ukrainian President Volodymyr Zelensky for more weapons, as many members of Congress are unhappy with the amount being spent on repelling the Russian invasion. This is a view shared by many members of the public, as a recent poll by Gallup showed that 41% of Americans believe the US is spending too much to support Ukraine in the war.

Amid the debate over the cost of backing Ukraine, the US is also considering imposing sanctions on Chinese businesses that it believes are helping Russia wage its war.

Democratic Congressman Gerald Connolly, a member of the US House Committee on Foreign Relations, told CNBC that this option is being considered after the European Union proposed a similar approach.

“China has to understand that the same kinds of sanctions which are beginning to really take hold in Russia and are affecting Russian productivity, economic performance and quality of life, can also be applied to China,” he said. “And frankly, China has a lot more to lose than Russia.”

Policymakers in the US are also paying close attention to the threat artificial intelligence may pose throughout this year’s presidential election.

Speaking to the BBC, Deputy Attorney General Lisa Monaco argued that while AI could deliver “profound benefits” to society”, it could be used by “malicious actors” to “sow chaos”, “supercharge” disinformation and incite violence.

“We are going to be seeking stiffer sentences and sentencing enhancements for those that use AI in a malicious way to commit their crime,” she said.

On the financial markets, the Dow Jones rose by 1.97% to end the month at 38,900, while the more broadly-based S&P 500 index went up by 4.95% to end at 5,085.

Far East

Ongoing tensions between China and other leading economies around the world have prompted its Foreign Minister to insist it can’t be excluded from global trade. Speaking at the Munich Security Conference, China’s Foreign Minister Wang Yi argued that the international economy is like “a big ocean that cannot be cut into isolated lakes”.

“More people have come to realise that the absence of cooperation is the biggest risk,” he said. “Those who attempt to shut China out in the name of de-risking will make a historical mistake”.

Mr Wang was speaking after the European Commission confirmed it is seeking to bolster the EU’s economic security by taking steps to limit the influence of China. The Economic Security Package has been proposed in order to give Brussels greater oversight over foreign direct investment in the bloc, as well as investments overseas by European businesses. At the same time, the US has floated the idea of imposing sanctions on Chinese businesses that it believes are helping Russia wage its war.

Meanwhile, new measures have been introduced which require developers working on major government projects to install monitoring equipment. The rules apply to businesses that have received at least £3.3m of government funding as authorities seek to turn its beleaguered property industry around.

Another issue that will be high on the agenda for the Chinese government in the coming months will be stimulating foreign direct investment. Last year, the amount invested in China by overseas businesses rose by the lowest amount in more than three decades. According to the State Administration of Foreign Exchange, China’s direct investment liabilities in its balance of payments stood at $33bn in 2023. This is 82% down on the previous year and the lowest level since 1993.

One area that has performed strongly in recent months is the tourism industry, with official figures showing that domestic tourism spending hit £69.7bn during the Lunar New Year break. This is 47% up on the same period of last year.

In Japan, the economy shrank by 0.4% in the last three months of 2023 year-on-year. This was worse than many economists had expected and came after a 3.3% drop in gross domestic product in the previous quarter, which means that Japan has now fallen into a recession.

The slump in economic output also means that Japan has lost its position as the third-largest economy in the world after being overtaken by Germany.

Despite the gloomy economic figures, global investors are returning to Japan’s main stock index – the Nikkei 225. On February 22nd, the Nikkei 225 rose by 2.19% to end the trading day at 39,098.68. This exceeds the previous record closing high of 38,915.87, which was set on December 29th 1989.

Meanwhile, the Japanese government has reaffirmed its support for Ukraine as the Russian invasion continues, with Prime Minister Fumio Kishida saying his country is committed to Ukraine’s reconstruction.

“The war in Ukraine is still going on at this very moment and the situation is not easy,” he said. “The promotion of economic reconstruction, however, is not only an investment for the future of Ukraine, but also an investment for Japan and the world.”

On the financial markets, Hong Kong’s Hang Seng index rose by 6.63% to end February at 16,511, while Japan’s Nikkei index rose by 8.76% to 39,166.

Emerging Markets

The Indian government has expressed confidence about the prospects for the country’s economy in the long-term. Piyush Goyal, Union Minister of Commerce & Industry, said the government’s aim is to grow the current $3.7tn economy to a $30-35tn economy by 2047, by which time it should be a fully developed nation.

“PM Narendra Modi’s vision to address the issues regarding the welfare of the poor, coupled with good governance over the last decade, has helped India transform from the 11th largest to fifth largest economy in the world and is on track to become the third largest GDP by 2027,” Mr Goyal said.

“India has witnessed the best-performing decade in the last 75 years of Independence, with inflation being halved in the past 12 years that has benefited the economy with interest rates in control.”

Mr Goyal added that India’s foreign currency reserves are now the fourth largest in the world and twice what they were a decade ago.

The minister’s optimism is well-placed as international ratings agency S&P Global has predicted that India’s economy will grow by 6.7% a year on average from 2023-24, with per capita income rising to $4,500 by 2030-31.

This roughly tracks with forecasts from the International Monetary Fund, which said in its latest World Economic Outlook that the Indian economy will see growth of 6.5% in both 2024 and 2025.

India has also been highly rated in the latest annual Global Entrepreneurship Monitor survey, being ranked second in a list of the best places in the world to start a new business – after the United Arab Emirates. Saudi Arabia, Lithuania and Qatar made up the rest of the top five.

The positive forecasts come at a time when India is gearing up for a general election. Last month saw the government present its final budget before voters go to the polls, which contained a heavy focus on infrastructure building, in particular transport projects such as roads and ports.

Despite this overwhelming good news, the latest Henley Passport Index has revealed that India’s passport ranking has slipped from 84th to 85th this year, even though the number of countries Indian passport holders can travel to without a visa has risen from 60 to 62.

Meanwhile, sanction-hit Russia’s economy continues to defy expectations, with President Vladimir Putin saying Russia boasts the fastest-growing economy in Europe. He was speaking after the International Monetary Fund upgraded its growth forecasts for 2024 from 1.1% to 2.6%.

Europe sought to put pressure on Russia following its invasion of Ukraine by placing restrictions on its oil and gas, but the Kremlin has overcome this by selling the bulk of its fuel to India and China instead.

However, the war is continuing to influence key business decisions in Russia. For example, Yandex NV, the Dutch parent company of Russian online giant Yandex, has sold its operation in Russia for £4.2bn. The business, often known as the “Russian Google”, will be in the hands of a consortium of Russian investors if the sale receives regulatory and shareholder approval. Yandex has experienced what it has described as “exceptional challenges” since Russia invaded Ukraine two years ago, including Nasdaq suspending the trading of its shares.

Anton Gorelkin, Deputy Head of the Russian parliament’s committee on information policy, has hailed the move, saying: “This is exactly what we wanted to achieve a few years ago when Yandex was under threat of being taken over by Western IT giants. Yandex is more than a company, it is an asset of the entire Russian society.”

In Brazil, the economy has outperformed many analysts’ expectations in recent months, with figures from the central bank showing economic activity rose by 0.82% in December 2023 month-on-month. This was higher than the 0.75% median estimate from analysts polled by Bloomberg.

On the financial markets, India’s BSE Sensex index rose by 1.19% to end at 72,500 points. Russia’s MOEX index rose by 1.11% to close at 3,249 points, while Brazil’s Bovespa index ended the month up 1.10% at 129,161 points.

And Finally…

Traditionally, children would have expected to find a £1 coin under the pillow after losing a tooth. But in the US, it seems the tooth fairy is becoming increasingly generous, with kids getting more and more lavish gifts.

According to the Wall Street Journal, the national average in the US for a tooth fairy gift has gone up from less than $2 in 2001 to more than $6 in 2023.

In fact, the newspaper found that some children have found $100 bills under their pillows after losing a tooth, while others have even received iPhones, silver jewellery and designer goods.

How times have changed!